Homework Help is Here – Start Your Trial Now!
Business
Economics
Between the amounts of labor L1 and L2, we know that if the price of labor is constant, then ____. a) the total cost of labor is decreasing b) the amount of output is decreasing c) the MPL is increasing  d) the MC of output is increasing e) the MPL is constant

Between the amounts of labor L1 and L2, we know that if the price of labor is constant, then ____. a) the total cost of labor is decreasing b) the amount of output is decreasing c) the MPL is increasing  d) the MC of output is increasing e) the MPL is constant

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

Between the amounts of labor L1 and L2, we know that if the price of labor is constant, then ____.

a) the total cost of labor is decreasing
b) the amount of output is decreasing
c) the MPL is increasing 
d) the MC of output is increasing
e) the MPL is constant

**Figure: Total Product** This graph represents the relationship between the total output produced (total output per period) and the number of units of labor used per day (units of labor per day). The horizontal axis (x-axis) indicates the number of labor units, while the vertical axis (y-axis) shows the total output or product resulting from these labor units. Key Points on the Graph: - **Point A:** This point on the curve represents an initial stage where the total product increases at an increasing rate as more labor units (L1) are added. This section of the curve usually illustrates the benefits of specialization and increasing returns to scale. - **Point B:** This point is the peak of the curve, indicating the maximum total product that can be achieved with a given number of labor units (L2). Beyond this point, the total product begins to decrease, demonstrating diminishing returns. - **Curve Shape:** The curve initially rises sharply, reflecting increasing returns, then flattens indicating decreasing returns, and eventually starts to decline past Point B, marking negative returns. This graph is fundamental in understanding the law of diminishing returns, which states that as more of a variable resource (labor) is added to a fixed resource (capital), the additional output produced from each new unit of labor will eventually decline.
Transcribed Image Text:**Figure: Total Product** This graph represents the relationship between the total output produced (total output per period) and the number of units of labor used per day (units of labor per day). The horizontal axis (x-axis) indicates the number of labor units, while the vertical axis (y-axis) shows the total output or product resulting from these labor units. Key Points on the Graph: - **Point A:** This point on the curve represents an initial stage where the total product increases at an increasing rate as more labor units (L1) are added. This section of the curve usually illustrates the benefits of specialization and increasing returns to scale. - **Point B:** This point is the peak of the curve, indicating the maximum total product that can be achieved with a given number of labor units (L2). Beyond this point, the total product begins to decrease, demonstrating diminishing returns. - **Curve Shape:** The curve initially rises sharply, reflecting increasing returns, then flattens indicating decreasing returns, and eventually starts to decline past Point B, marking negative returns. This graph is fundamental in understanding the law of diminishing returns, which states that as more of a variable resource (labor) is added to a fixed resource (capital), the additional output produced from each new unit of labor will eventually decline.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS